Strengthening Vietnamese goods in ASEAN market

11:25 | 11/01/2017 Trade

(VEN) - Almost one year after the establishment of the ASEAN Economic Community (AEC), it remains difficult for Vietnamese goods to benefit from this common market.  

Vietnamese businesses are seeking opportunities for pushing up exports to ASEAN - Photo: Can Dung

Uneasy access

With total population of more than 600 million, ASEAN has become one of the largest trading partners for Vietnam. Its proximity to Vietnam and certain similarity in types of goods have encouraged Vietnamese businesses to promote trade with this market. The AEC was established with the aim to create a common market with low tax rates to promote trade between member countries.

According to the director of the Asia-Pacific Market Department of the Ministry of Industry and Trade (MoIT), the AEC will help businesses increase exports to ASEAN and enhance the competitiveness of Vietnamese goods in this market. The elimination of tariff barriers will facilitate the circulation of Vietnamese goods and services in ASEAN. The AEC will bring new export opportunities to sectors such as textiles and garments, footwear, fertilizer, food, agricultural products, and construction materials.

ASEAN has signed free trade agreements with non-member partners such as India, China, Australia, and New Zealand. Therefore, the AEC will facilitate Vietnamese exports to not only ASEAN but also other markets which are ASEAN’s partners.
Over the past five years, Vietnam has seen a continuous deficit in trade with ASEAN countries. In 2010, the trade deficit was about US$6 billion, equal to 57 percent of the export value. In 2014, it decreased to about US$4 billion, equal to 20.3 percent of the export value. In 2015, while the export value dropped compared with 2014, the trade deficit grew to over US$5 billion, accounting for more than 20 percent of the export value.

While the AEC is expected to create more export opportunities, Vietnamese exports to ASEAN have seen a continuous decline since the beginning of 2016. According to the MoIT, Vietnam exported US$15.79 billion worth of goods to ASEAN in the first 11 months, down 6.4 percent compared with the same period last year, while the import value reached US$21.24 billion, down 1.9 percent.

Tran Thi My Van, communications representative of the Acecook Vietnam Joint Stock Company, said that the company has exported its products to 47 countries and territories. Acecook Vietnam wants to promote exports to ASEAN member countries to take advantage of preferences from the AEC, but it is not an easy way.

Not only Acecook but many other Vietnamese companies have also encountered difficulties in seeking access to the ASEAN market. Experts attributed these difficulties to the certain similarity in types of goods between member countries. Moreover, the competitiveness of Vietnamese goods remains lower compared with products of regional countries such as Thailand and Singapore. Meanwhile, Vietnamese goods have to compete also with Chinese products. Poor or inadequate market research and information is another reason hindering Vietnamese businesses’ access to the ASEAN market.

Boosting exports to ASEAN

Following the establishment of the AEC, ASEAN member countries have opened their markets to each other’s goods and services. Vietnamese goods therefore have to compete fiercely with products of other ASEAN countries. Meanwhile, Vietnam has also faced pressures when exporting to ASEAN. Moreover, as soon as they eliminated tariff barriers, ASEAN members have set specific technical standards to protect their domestic markets and restrict exports from other countries.

To take advantage of preferences from the AEC in order to increase trade with ASEAN, especially to boost exports to this region, Deputy Prime Minister Trinh Dinh Dung recently assigned the MoIT to coordinate with concerned authorities to disseminate ASEAN’s trade regulations and commitments. Aiming at enhancing the awareness of stakeholders on opportunities and challenges from the AEC, this dissemination will also help domestic companies to timely adjust their production and business development plans in such a new environment

At the same time, the MoIT needs to learn carefully about the demand of the ASEAN market as well as the competitiveness of goods from countries which have similar economic conditions and manufacturing capabilities to Vietnam. Based on these analyses, the MoIT should identify products which could be key Vietnamese exports to ASEAN. Trade promotion and business connection activities should be intensified to help domestic companies seek partners and export opportunities. Furthermore, the MoIT needs to provide businesses with information about the ASEAN market and make schedules for organizing annual Vietnamese goods fairs in ASEAN member countries.

The MoIT has also been assigned to coordinate with concerned authorities to create favorable conditions for businesses to set up Vietnamese goods distribution systems overseas, penetrate and establish long-term strategic partnerships with distribution chains in ASEAN member markets in order to increase the presence of Vietnamese goods in ASEAN.

In the opinion of Asia-Pacific Market Department Deputy Director Do Quoc Hung, to boost exports to ASEAN, Vietnamese businesses need to improve quality and increase the local content of products by improving technologies, while at the same time building brands based on quality and added value. In addition, they should build distribution channels in export markets and intensify market research and trade promotion activities. Finally, good knowledge of integration is crucial to protecting domestic businesses in the regional and global markets.

Lan Phuong